Main Article Content
Operational Assets, Long-term Assets, Capitalized Interest, Depreciation, Asset Impairment, Disposition
For many firms long-term operational assets are the largest category of asset on their balance sheet. Accounting students need to understand how these assets are accounted for throughout the lives of the assets to understand the effects they have on a firms balance sheet and income statement. This case includes all of the normal issues involving operational assets and walks the student through the entire life-cycle of one asset owned by Big Muscle Corporation. The case requires students to identify which costs are capitalized into long-term assets, calculate capitalized interest on a self-constructed asset, depreciate an asset, change depreciation methods, perform an impairment test, and, finally, dispose of an asset. When a student has successfully completed the case, they will have a good big picture view of how operational assets are accounted for in the United States and the various issues associated with the accounting for these important assets.